Is Europe addressing the wrong growth crisis
With new French President François Hollande’s victory, some form of ‘growth pact’ to accompany the fiscal treaty has become a near certainty. This is a good thing: austerity without growth is not working; it neither leads to fiscal consolidation, nor does it encourage adequate structural reforms. And the social and political impact of this recipe will inevitably lead to meltdown, to which Greece is already precariously close. This is where the growth pact should be focused: on the countries in crisis and not on those countries, like France, which still have options left to reform themselves, writes Fabian Zuleeg in this Commentary.
But achieving growth won’t be easy: Europe is facing two growth crises at the same time: a sluggish overall growth level, in part predating the crisis, and growth divergence, with the countries in trouble on a downward spiral, opening an increasing gap with the best-performing countries, Zuleeg argues.
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